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UK housing: Why do we need so many new homes?

A common objection to new housing development by members of the public is that we don't need to build quite so many homes. In this article, we consider whether that is actually the case.

The Scale of Demand

The population in England is not only rising, but its structure is changing too. People are living longer, marrying later and divorcing more often, which combine to increase the number of households that the country must accommodate.

In her 2006 review of the housing market, economist Kate Barker recommended that 250,000 new homes needed to be delivered each year over the next 25 years to meet both that growing demand and the shortage of homes that had already built up.

The latest set of household projections published by the government in April 2013 suggest that we need to build 221,000 homes each year up to 2021 simply to meet future demand and without making any inroads into the shortage of homes that has already developed.

That is a lot of new homes.

The Current Rate of Development

With all the coverage in the popular press about the recent changes to the planning system being a licence to build homes, you would think we are getting close to that target already. But in reality, that is not the case at all.

The government records the number of new homes completed each year, and in 2013/14 that figure was just 112,630 – less than half the level needed. This isn’t a problem created by the recession either. In 2006/7, the last year of the housing market boom, 167,680 homes were completed. The last time more than 200,000 homes were built in a year was 1988/89 – over 25 years ago.

So, if anything, the shortage of homes is actually getting worse.

The Consequences of Under Delivery

But why does all this matter? Everyone is already living somewhere so is it right to build on green fields to deliver those new homes?

There are a wide range of consequences of this continuing failure to build enough new homes. Here are just a few of them:

Since 1988 (the last time we built more than 200,000 homes in a year), average house prices have increased from £45,000 to over £178,000 – that’s 295%.

The Economist reports that the proportion of people aged between 16 and 24 living in homes they own has fallen from 36% in 1991 to just 10% in 2012. The proportion of 25 to 34 year olds living in homes they own has fallen from 67% to 39.5% in the same period.

Research by the Council of Mortgage Lenders reveals that the average age of an unassisted first-time buyer is now 33 years old.

Unassisted first-time buyers now spend, on average, £81,321 on rent before they buy their first home.

652,000 households in England are living in over-crowded homes, according to a government report from February 2014.

An investigation by charity Shelter found that 80,000 children spent last Christmas in temporary accommodation.

That last statistic is perhaps the most damning of all. Whatever the language planners might use, these aren’t ‘dwellings’ or ‘units’ - they’re homes. Homes for people to live in and call their own, to provide them with security and happiness.

It is unfortunate that in the planning debate that reality is often given very little consideration.

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